R.I. governor dismisses accusations

PROVIDENCE, R.I. -- Rhode Island Gov. Lincoln Chafee on Tuesday dismissed Curt Schilling's accusations that his remarks about the former Red Sox pitcher's video game company hurt its financial position.

Chafee's administration also disputed Schilling's assertion that the state reneged on film tax credits promised to 38 Studios. Chafee said he has worked since he was elected to assist the company and protect the state's investment in it.

"Obviously I want to see it succeed," Chafee told reporters Tuesday. "But I have to be honest in my dealings with the taxpayers and tell them what's going on."

In his first public remarks on the company's problems, Schilling told The Providence Journal for Tuesday's editions that Chafee's recent comments that the state was trying to keep his company solvent were "devastating." He said that shortly after those remarks, a video-game publisher pulled out of a $35 million deal to finance a new game.

"The governor is not operating in the best interest of the company by any stretch, or the taxpayers, or the state," Schilling told the newspaper. "We're trying to save this company and we're working 24/7. The public commentary has been as big a piece of what's happening to us as anything out there."

Chafee said any potential investors weren't likely to be scared away by his comments. "Any time there's a chance to make money the investors will be around," he said.

Schilling also said the state promised and did not deliver film tax credits for 38 Studios and refused to allow the company to defer a $1.1 million payment to the Economic Development Corp., forcing it to miss payroll on May 15.

Rhode Island Tax Administrator David Sullivan said 38 Studios' request is still under review and that the company was never promised tax credits.

A message left for Schilling, who is also an ESPN analyst, was not immediately returned Tuesday.

38 Studios, which was lured to Rhode Island from Massachusetts in 2010 with a $75 million loan guarantee from the state's Economic Development Corp., laid off its entire workforce last week, including about 300 employees in Providence and more in Maryland. The state would likely be responsible for some of 38 Studios' debts should it collapse.

Chafee said Tuesday that EDC Board member Lynn Singleton has resigned from the board, becoming the second board member to step down since questions about 38 Studios' health arose. Board Vice Chairwoman Helena Foulkes and EDC Executive Director Keith Stokes -- a vigorous backer of the guarantee -- have already resigned.

The firm's financial troubles came to light this month when it defaulted on a $1.1 million payment to the EDC that was due May 1. The company later paid -- but only after first delivering a check that it acknowledged soon after would not clear.

Now the company is again violating its loan agreement with the state, Chafee said. Under federal law, employers who have at least 100 employees and plan to shed at least 50 jobs are required to give a 60-day notice to workers and state unemployment officials.

Bill Thomas, the 38 Studios president, told The Journal that the state was notified of the layoffs on May 25 because the company "wanted our employees to hear it from us first."

The 45-year-old Schilling said he stands to lose all the money he saved while playing baseball, and rejected criticism that he is seeking a public handout.

"I have done whatever I can do to create jobs and create a successful business, with my own income," he said. "Fifty million dollars, everything I've ever saved, has been put back into the economy. The $49 million from Rhode Island has been put back in the economy. I've never taken a penny and I've done nothing but create jobs and create economy. And so how does that translate into welfare baby? I've tried to do right by people."

Chafee, an independent, has said he wants to help the company succeed, but opposes allowing 38 Studios to receive film tax credits after receiving so much in state bond proceeds.

Jonathan Savage, a business lawyer who is representing Chafee, said the state is willing to give up its first position to 38 Studios' assets if that will help attract a private investor.

Schilling said that might help, and he's hoping the company is not finished.

"I pray that it's not," he said. "We're doing everything we can do to make that not be the case."